Caribbean fact sheet

Jun 11, 2003 02:00 AM

The Caribbean Sea region plays an important role as a petroleum processing and transhipment area, with several major
refineries and independent storage facilities.
Furthermore, Trinidad and Tobago is becoming an increasingly significant supplier of LNG to regional markets and to
the United States.

The islands of the Caribbean basin, with a total population of approximately 37 mm in 2002, are predominantly net
energy importers, with the exception of hydrocarbon rich Trinidad and Tobago. Agriculture and natural resource
extraction activities continue to constitute the basis of the islands' economies, though tourism and service sectors
are growing.
In the larger economies, manufacturing is also important, such as oil and natural gas production in Trinidad;
pharmaceuticals and cement in Puerto Rico; and textiles in the Dominican Republic and Jamaica. Economic growth,
however, varies across the region. While many of the islands' economies contracted in 2002, Trinidad and Tobago and
the Dominican Republic's economies continued to grow, with real gross domestic product (GDP) growth rates of 2.6 %
and 4.1 %, respectively.

Over the past decade, the Caribbean states have made efforts to integrate their economies. The major regional
organization is the Caribbean Community and Common Market (CARICOM), whose members include the South American states
of Guyana and Suriname and the Central American State of Belize, and the Caribbean islands of Antigua and Barbuda,
The Bahamas, Barbados, Dominica, Grenada, Haiti, Jamaica, Montserrat, St Kitts and Nevis, St Lucia, St Vincent and
the Grenadines and Trinidad and Tobago.
All other islands, with the exception of Cuba, have either associate or observer status. The Caribbean Community has
three objectives:
(a) economic cooperation through the Caribbean Single Market Economy;
(b) coordination of foreign policy among the independent Member States; and
(c) common services and cooperation in functional matters such as health, education and culture, communications, and
industrial relations.
CARICOM countries have steadily reduced tariffs among members. Besides CARICOM, the other main organizations of the
region include the Association of Caribbean States, the Eastern Caribbean Currency Union and the associated Eastern
Caribbean Central Bank.

Oil and natural gas
In 2001, the islands of the Caribbean region consumed a combined total of 2.2 quadrillion Btu of energy. Oil is the
dominant fuel, accounting for about 92 % of total 2001 energy consumption. The Caribbean relies on imported oil for
most of its energy needs. Barbados, the Dominican Republic, Haiti, and Jamaica are party to the San Jose Pact, under
which Mexico and Venezuela supply crude oil and refined products under favourable terms.
Natural gas and hydropower are used in countries that have these domestic resources. Natural gas is used most
extensively in Trinidad and Tobago, where natural gas-intensive industries, such as steel, fertilizer, and
petrochemicals are important to the country's economy. Puerto Rico and the Dominican Republic import LNG from
Trinidad and Tobago for power generation.

Production
Only three Caribbean countries have oil and natural gas reserves: Barbados, Cuba, and Trinidad and Tobago. Of these,
Trinidad and Tobago is the only significant exporter.

Trinidad and Tobago
Trinidad and Tobago is the Caribbean's largest producer of oil and gas. In 2002, oil production averaged about
141,500 bpd, of which 121,833 bpd was crude oil. Crude oil reserves, at an estimated 716 mm barrels, are expected to
last only another decade unless new reserves are found. BP is the nation's largest oil and gas producer. Petrotrin,
the state oil company, is the second largest oil producer.
In contrast, the country's natural gas reserves are expected to increase significantly in coming years. Proven
natural gas reserves currently stand at 23.5 tcf. In 2001, the country produced 536 bn cf of natural gas.

Trinidad and Tobago has become one of themajor natural gas development centres in the world. Natural gas is expected
to surpass oil as the main revenue earner for the country in the near future. According to the Trinidad and Tobago
Ministry of Energy and Energy Industries, about 36 % of its natural gas was exported in 2002 as LNG, while the rest
was used domestically, particularly for ammonia and methane manufacturing.
Trinidad now has nine ammonia complexes, six methanol units, a urea plant, and an iron and steel complex. In early
2004, the largest methanol plant in the world, Atlas, is expected to be completed. Atlas will be surpassed by an even
bigger methanol project, M5000 facility, which is due to enter production in 2004. Trinidad is the world's leading
exporter of both ammonia and methanol.

Exploration and production
Both natural gas and oil exploration activities in Trinidad and Tobago have continued at a fast pace over the last
three years. During 2000-2001, British Petroleum Trinidad (BPTT) alone added more than 6 tcf to its own reserves. EOG
Resources (US) announced in May 2002 a new discovery in its SECC block, located off Trinidad's eastern shore.
The new discovery is expected to add 250-350 bn cf of natural gas to the field's existing reserves. Repsol-YPF and
BPTT discovered in September 2002 nearly 1 tcf in the Iron Horse field, located east of Trinidad and Tobago.

Recent developments
The Trinidad and Tobago government granted approval in March 2003 to BHP Billiton, TotalFinaElf, and Talisman Energy
to proceed with the $ 726 mm first phase development of the Greater Angostura project, located off the north-eastern
coast of Trinidad. The companies will be developing Block 2(C). Billiton estimates that the block contains up to 160
mm barrels of oil and 1.75 tcf of natural gas. It is expected that this field could produce 75,000 to 100,000 bpd,
significantly increasing the country's crude oil production.
In April 2002, BG International, Billiton, Talisman, and TotalFinaElf signed a Production Sharing Contract (PSC) with
the government for the adjacent Block 3(a). The group plans to drill two wells in the Block later this year.

Deepwater exploration
In 1998, Shell, BP, Arco and ExxonMobil received licenses to drill off the eastern coast of Trinidad in depths
ranging from 2,460 to 4,921 feet. The four deepwater Blocks -- 25(a), 25(b), 26 and 27 -- have yet to produce oil
after drilling seven wells. In March 2003, Shell returned Block 25(a) to the Trinidad government, after the well
proved to be non-commercial.
The Trinidad government is not giving up hope of finding commercial deposits of oil. In June 2002, the government, in
conjunction with 12 foreign firms, undertook a new seismic study of previously unexplored regions with depths ranging
from 5,576 to 9,480 feet.

New licensing round
The Trinidad and Tobago government plans to launch a nine-block licensing round, which is expected to run from May 23
to September 30, 2003.
The first two Blocks, 23(a) and 24(b), are in ultra-deep water. They are located near the area where the government
recently conducted a seismic study (mentioned above). Blocks 2(ab), 3(b) and 4(a) are located in shallow waters to
the east of Trinidad. Blocks 1(a) and 1(b) are west of Trinidad in the Gulf of Paria. The finally two Blocks, 22 and
24, also located near 23(a) and 24(b), but are not as deep.

Joint field development with Venezuela
Trinidad and Tobago has been in negotiations with Venezuela to develop and possibly combine the two countries' gas
reserves in the Deltana region, located of the Paria Peninsula. These negotiations, however, have been placed on
hold.

Pipelines
The Trinidad and Tobago government plans to build an undersea natural gas pipeline throughout the eastern Caribbean
states. The proposed 600-mile pipeline would run north from Trinidad, connecting to other islands en route to the
French island of Guadeloupe.
The pipeline would serve the islands Martinique, Guadeloupe, Barbados, Grenada, St Vincent, Grenadines, St Lucia and
Dominica. There has also been discussion of potentially extending the pipeline to Florida.

LNG
Trinidad and Tobago is the largest LNG exporter to the United States. The Atlantic LNG Company of Trinidad and Tobago
currently operates three LNG trains on the islands. The Atlantic plant is considered the largest single-train plant
ever built, and the first LNG producer in the Latin America and Caribbean region.
The plant recently underwent a $ 1 bn expansion to triple its capacity from 3 mm to 9 mm tpy by adding a second and
third train. Train 2 began operation in August 2002, while Train 3 came on line in April 2003. 62.5 % of the total
output of Trains 2/3 is committed to the Spanish market. The remaining 37.5 % is sold in the US market, mainly in
southeast, through the Elba Island Terminal and to Lake Charles. The Dominican Republic also imports LNG from
Trinidad.

BP is building one of the world's largest offshore gas processing units, the Kapok platform, as part of a $ 600 mm
project to supply gas to these additional trains. BPTT is also constructing a 30-mile long pipeline, the "Bombax".
The pipeline will feed natural gas from Kapok to Atlantic LNG's Trains 2 and 3, and to the Atlas Methanol plant. The
pipeline will be one of the world's largest, with a transport capacity 2 bn cfpd.
Partners of Train 1 are BP, BG, Repsol, Tractebel, and National Gas Company of Trinidad and Tobago (NGC). Partners of
Train 2 and 3 are BP, BG and Repsol. Additional Trains
Negotiations for the construction of a fourth train, which, according to design plans, would raise Trinidad and
Tobago's LNG production capacity to 13.8 mm tpy, are ongoing. The construction of the fourth train was originally
scheduled to begin by the end of 2002 and come online at the end of 2005. The government has also indicated that it
would be interested in constructing a fifth and sixth train.

Cuba
Cuban oil production has more than doubled since 1991. In 2002, Cuban oil production averaged 49,300 bpd while oil
consumption averaged 157,000 bpd. Most domestic crude oil production consists of a heavy, sulphur-laden oil, which is
converted into usable fuel. Refineries process imported crude oil, mainly from Venezuela and Mexico.
Cuba has a financial arrangement with Venezuela, allowing for the sale of oil under preferential conditions. Cuba
imports 53,000 bpd of crude oil and refined products from Venezuela, representing approximately a third of the
island's oil demand. The contract, which was signed in October 2000, is set to expire in 2005. Natural gas production
has also increased significantly in Cuba since the early 1990s. As of January 2003, proven natural gas reserves stood
at 2.5 tcf.

Exploration and production
The Cuban government plans has set a goal to generate all of its electricity demand from domestic crude oil
resources, making the island self-sufficient in energy. Increases in oil and natural gas production already fulfil
more than 50 % of domestic energy demand, according to the Cuban government. The government has forecasted that the
combined oil and natural gas production will increase by 17 % in 2003.
Cuba's territorial waters in the Gulf of Mexico are expected to hold the most promising oil prospects. In early 2000,
Cuba offered 59 offshore blocks in its deepwater economic exclusive zone (EEZ) for oil exploration by international
oil companies. The Cuban government has awarded Repsol-YPF (Spain) and Sherrit International (Canada) blocks in the
EEZ. The United States maintains an economic embargo against Cuba, and oil companies from other countries may be
subject to US sanctions under the Helms-Burton Act of 1996 if they conduct significant transactions in Cuba.

New developments
Sherrit International announced in March 2003 that it plans to invest $ 110 mm in its oil and gas operations in Cuba.
Petrobras of Brazil expressed interest in restarting oil exploration in Cuba after the Cuban government offered
Petrobras a deep-water exploration block in Gulf of Mexico.
Two years ago, Petrobras abandoned exploration efforts in Cuba following disappointing results. Pebercan (Canada)
doubled crude oil production at its Block 7 joint-venture (Sherrit) in 2002. Pebercan expects to increase its
production as it brings more wells online.

Barbados
Oil production for 2002 totalled 1,200 bpd. Oil production has declined slightly since 2001 despite efforts of
Barbados National Oil Company (BNOC) to expand oil production. BNOC contracts with a consortium led by
Triassic.
As Barbados has no refining capacity, its oil is refined in Trinidad, and then returned for domestic consumption.

Other regional developments
Jamaica announced in April 2003 that it plans to restart exploration efforts off its southern coast. Jamaica expects
to receive support from Ecuador and Venezuela. US companies AES Ocean LNG and El Paso and Belgium's Tractebel have
plans to build regasification terminals in the Bahamas, from where it would be piped to Florida.
If approved, AES would construct a regasification terminal at Ocean Cay in the Bahamas, along with a 54.3-mile
pipeline to Florida. The pipeline would have a capacity of 842 mm cfpd. AES has already received provisional
permission from both the US Federal Energy Regulatory Commission (FERC) and the Bahamian government. Environmental
impact assessments will determine whether the project will be able to proceed.

Tractebel, which also received approval from FERC but is still waiting approval from Bahamian authorities, would
build a LNG regasification terminal in Freeport, on Grand Bahama Island, as well as a 54-mile pipeline (Calypso),
with a capacity of 832 mm cfpd.
El Paso has already received provisional approval from the Bahamian government but not yet from FERC. El Paso also
plans to build its terminal on Grand Bahama Island. The pipeline (Seafarer) would have a capacity of 1 bn cfpd. The
Bahamian government indicated, however, that it would only accept two of the three proposed projects. In November
2002, the Bahamian government granted the oil company Kerr McGee a license to drill oil in Bahamian waters.

Refining
Crude oil refining capacity in the Caribbean exceeds 1.7 mm bpd. Smaller refineries are geared towards meeting local
demand, while the larger refineries in Aruba, the Netherlands Antilles, Trinidad and Tobago, and the US Virgin
Islands serve both local and export markets.
The Hovensa refinery of St Croix, owned by Hess and the Venezuelan state oil company, PdVSA, is among the largest in
the Western Hemisphere. PdVSA also operates the Curacao Isla refinery (The Netherlands Antilles), which the company
is in process of expanding. PdVSA is investigating the possibility of building two new refineries in the Dominican
Republic, as well as reactivating the Cienfuegos refinery in Cuba.

In August 2002, the Trinidad and Tobago government granted Soreco approval for the construction of a 224,000-bpd
refinery. The refinery, the Sabaneta Refinery Project, is expected to be completed in 2005. However, it remains
unclear whether the project will move forward due to difficulties of securing $ 2 bn in loans for the project.
US energy company El Paso plans to sell its refinery on Aruba, Coastal Aruba Refining Company, in 2003.

Storage
The Caribbean region has a number of independent petroleum storage facilities, with the capacity to store
approximately 100 mm barrels of crude oil and petroleum products. In addition to long-term storage arrangements,
these facilities offer logistical options for petroleum shipments.
Islands with storage facilities include: Bahamas, Trinidad, Puerto Rico, Saint Lucia, Aruba, and St Eustatius,
Curacao, and Bonaire of the Netherlands Antilles.

Exports to the United States
In 2002, the continental United States imported about 390,000 bpd of petroleum from the Caribbean, of which about 83
% were petroleum products. The US Virgin Islands was the largest single regional exporter to the United States (about
236,000 bpd of petroleum products), followed by The Netherlands Antilles (about 74,000 bpd of petroleum products),
and Trinidad and Tobago (80,000 bpd of total crude and petroleum products). Trinidad and Tobago is the only exporter
of crude oil (68,000 bpd) from the region.

Electricity
Installed electric generating capacity in the Caribbean exceeds 17 GW. In general, the region needs additional
capacity. Several countries (including the Dominican Republic, Haiti, and Cuba) experience power outages on a regular
basis. Electricity demand in the region is expected to grow substantially in the coming decade.

The Dominican Republic
The Dominican Republic has been plagued by electricity blackouts for years. In 1999, the former President Leonel
Fernandez privatised parts of the state-owned Dominican Electricity Corporation (CDE) in the hope of eliminating the
country's power outage problems. However, privatisation has yet to assure a steady supply of electricity to the
population.
A dispute between the Dominican government and the private companies which acquired parts of CDE in 1999 reportedly
is partly responsible for the blackouts. When CDE was split up, Union Fenosa (Edenorte and Edesur subsidiaries) and
AES (Edeeste subsidiary) bought into the distribution network. In September 2002, the government and customers began
falling behind on their payments, leaving the private companies without enough money to pay generators.
The distributors periodically stopped supplying electricity, resulting in blackouts. Although current President
Hipolito Mejia renegotiated contracts between the government and private power companies in an effort to solve the
country's power supply problems in September 2002, the situation has not improved.

Despite the need for further structural reform, foreign firms continue to invest in the Dominican Republic's power
infrastructure. AES Andres, a subsidiary of AES, has invested $ 400 mm to construct an LNG import terminal, a
regasification facility, a pipeline and a 300-MW combined cycle power plant, located outside of Santo Domingo.
The LNG terminal received its first shipment in February 2003. However, since the 300-MW power plant will not be
completed until summer 2003, the imported natural gas has been going to the Los Mina power plant in Santo Domingo,
which AES converted from fuel oil to natural gas. In April 2003, Canada signed two $ 35 mm agreements with the
Dominican government to build hydroelectric and renewable energy projects.

Jamaica
In March 2001, the US-based utility Mirant, completed an 80 % acquisition of formerly government-owned Jamaica Public
Service Company, the island's main power provider. Mirant has stated that it is making progress in reducing the
number of blackouts currently affecting Jamaica due to lack of capacity.
Including independent producers, installed capacity is 700 MW, and Mirant expects to add 385 MW to the system in
2003. Last year, Jamaica made the decision to begin replacing fuel oil with natural gas for its power plants and
bauxite and aluminium sectors. The Jamaican government plans to import LNG to meet natural gas demand.

Puerto Rico
In January 2000, Puerto Rico's primary electric power producer and grid operator, publicly-owned Puerto Rico
Electrical Power Authority (PREPA), initiated a $ 2.4 bn program to increase the island's electric generation
capacity. Economic growth in the late 1990s averaged 3 %, resulting in concerns that electricity demands associated
with economic growth would exceed generation capacity. In response, PREPA began signing contracts with independent
power producers (IPPs) to increase the island's generation capacity from about 4.9 GW to 5.2 GW by 2003.
A new 454-MW power station, built by US-based AES, is the first coal-fired plant in Puerto Rico. The plant has the
additional benefit of being able to sell its steam to Phillips Petroleum's Puerto Rico subsidiary. The EcoElectrica
and AES facilities are part of a general plan to reduce Puerto Rico's dependence on oil for electricity generation.
In August 2000, the first shipment of LNG from Trinidad and Tobago arrived at Punta Guayanilla, near Ponce, where
there is an LNG receiving terminal used to supply gas to the plant.

Renewable energy
Only Jamaica and Cuba had significant amounts of power generated from non-hydro renewable (geothermal, solar, wind,
wood and waste) electric sources in 2001. Cuba produced approximately 0.8 bn kWh of renewable power while Jamaica
generated 0.1 bn kWh.
The Dominican Republic was the largest producer of hydroelectricity in the Caribbean, with 0.7 bn kWh. This was
greater than hydropower produced by Cuba, Haiti, Jamaica, and Puerto Rico combined.

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